RTTNews - Wednesday, the Organization for Economic Co-operation and Development said Slovenia requires structural reforms even during bad times to achieve fiscal sustainability.
The new pension reform should try to lower the replacement rate and raise the effective retirement age as the last pension reform was insufficient to ensure long term sustainability. The Paris based agency said as soon as the crisis subsides, the strategy of pre-funding part of ageing cost should be resumed by developing a balanced budget over the medium term. Accordingly, a public expenditure rule should be designed to ensure a gradual fall in expenditure as a percentage of GDP.
OECD added that design of the pension reform need to avoid incentives for early retirement, facilitate gradual exits from the labor force as well as increase the retirement age. As the ratio of the minimum wage to the average one in Slovenia is very high by international comparison, it should reduce the ratio further.
The agency said steps taken to support the banking sector was appropriate and the sizeable fiscal stimulus is justified as there remains room for discretionary fiscal policy. But the nation should prioritise those measures that assist in fostering its potential growth.
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